Agency

Question 1

Creation of Agency

Answer 1

An agency relationship is created when a principal and agent consent to the agent acting for the principal’s benefit, and the agent is subject to the principal’s control.

Question 2

Actual Authority

Answer 2

Actual authority is authority that the agent reasonably believes they possess based on the principal’s dealings with them. It can be express or implied from the actions of the principal

Question 3

Apparent Authority

Answer 3

Apparent authority exists when the principal “holds out” the agent as having certain authority, causing a third party to reasonably believe the agent has such authority

Question 4

Ratification

Answer 4

A principal can ratify the acts of their agent by expressly or impliedly affirming or accepting the benefit of the acts, so long as they knew the reasonable facts and had the capacity

Question 5

Disclosed Principal

Answer 5

When a principal’s identity is disclosed to a third party, the principal is a party to the contract

Question 6

Partially Disclosed Principal

Answer 6

If a principal is partially disclosed, unless the agent and third party agree otherwise, the agent is a party to the contract

Question 7

Undisclosed Principal

Answer 7

An agent is liable to a third party unless they disclose the identity of the principal. In that case, the principal will also become a party if the agent had authority

Question 8

Election of Remedies Doctrine

Answer 8

Once a third party discovers the existence of the principal, they must choose to hold liable either the principal or agent

Question 9

Vicarious Liability/Respondeat Superior

Answer 9

Under the doctrine of respondent superior, a principal may be liable for the tortious acts of his agent when (1) the employee was acting in their scope of employment; (2) made a minor detour; or (3) committed an intentional tort for the principal’s benefit that was authorized or arose naturally from the employment

Question 10

Indemnification of Agent

Answer 10

A principal can recover against the agent for indemnification if the agent acts beyond his authority

Question 11

Principal Direct Liability

Answer 11

A principal is directly liable for their own negligence, including negligent hiring

Question 12

Agent’s Duties

Answer 12

An agent owes a duty of care and a duty of loyalty (not to engage in self-dealing, not to profit without disclosure, and a duty to follow instructions)

Question 13

Independent Contractor vs. Employee

Answer 13

In determining whether an individual is an independent contractor or employee, the primary issue is whether the principal has the right to control the individual’s methods and manner of work.